Baldwin City approves housing start incentives for another year

The Baldwin City Council agreed Monday to extend for another year incentives meant to spur new housing development in the community despite little evidence they are effective and a so-so recommendation from city staff.

The incentives, first approved for 2012, reduces by 50 percent the city’s electrical, water and sewer system development fees and park fees charged on new residential construction. The incentives slash development fees for a single-family home to $3,185.

Brad Smith, interim city administrator, told the council there was no evidence the incentives did anything to encourage development through most of its history with housing starts peaking at two in 2014. Although he voiced reservations about continuing the incentives that took money away from capital improvement funds established for the electrical water and sewer utilities and parks, he wasn’t opposed to continuing them because they didn’t prompt enough activity to cost the city revenue.

Things were different in 2015 because of the successful response to the community’s securing a $200,000 Kansas Housing Authority Corporation grant, which provided homeowners up to $20,000 toward the down payment of a single-family home.

With that grant, which was secured through the efforts of Dave Hill of MidAmerica Bank, the city had 10 new home starts in the past 12 months. As part of the terms of that grant, the city agreed to forego development fees on the homes the grant helped finance.

Defending the extension Monday were Hill and local realtor Casey Simoneau, who argued the time wasn’t right to end the incentives. Simoneau said the grant-built homes provided examples of how city government benefited from the incentives because the development fees written off for their construction would be made up in property taxes alone in three years.

The incentives were needed because the city was still shaking off the effects of the recession and developers and homebuilders did not yet view Baldwin City as an attractive place to invest, Hill said. He said prices for lots in the Signal Hill and Fire Tree subdivisions were about half what they were before the recession. He suggested those lot prices provided an indication of the health of the local new-home market, and that incentive should be kept in place until those prices returned to something like pre-recession levels.

Hill and Simoneau said there were people watching the council’s decision on the extension with interest, including the developer of a 28-unit multi-family housing complex that could be slated for 2016. That development of 14 duplexes would be built through a program offered by the same agency that made this year’s grant available, Hill said.

The council voted 5-0 to extend the incentive another year. Smith did, however, suggest there were alternatives to the incentives the council could consider in the future. Rather than discount fees, some cities allow deferred fee schedules, he said. He also suggested the city might what to duplicate the grant program, which proved such a success in the past year.

“If the construction fees are not discounted, the city would recoup a significant portion of the grant money very quickly, with the remainder being recovered from property taxes over subsequent years,” he wrote in his report to the council.

In other business, the council:

Renewed the lease with the Baldwin City Business and Professional Women Club for the community garden on Second Street north of the cemetery through 2017 for $1 a year. The BPW has offered garden plots on the property for the past four years.

Smith said the lease had expired in recent year and although the arrangement remained in place. The BPW was asking for the renewal of the formal lease because of the opportunity to secure a United States Department of Agriculture Grant of from $2,500 to $3,500 to purchase a high-runner greenhouse for the site. BPW President Barbara Pressgrove said she planned a structure of clear plastic rolled over metal loops from 10 to 12 foot wide and 30 to 40 feet long. It would allow for garden plants to be planted earlier in year for transplant outside or simply grown in the greenhouse all year around, she said.

She would be responsible for managing and maintaining high tunnel, including the critical job of ensuring the temperature inside did not become to hot, Pressgrove said. Another benefit of the high runner would be added visibility for the community garden, which might encourage more residents to rent plots at the site, she said.